The Australian Sugar Industry

Sucrogen – more than sugar We think so!

CSR Sugar “Sucrogen” participates across the value chain GrowingMillingMarketingLogisticsHarvestingRefining Cogen Molasses Ethanol Fertiliser 7 Farms in Burdekin region 2 harvesting groups 7 mills 14Mt cane 2Mt sugar 45% of Australian production Industry owned port terminals (STL) Marketing Agreement with QSL Sugar Australia (75% Sucrogen) New Zealand Sugar (75% Sucrogen) 3 Refineries 970kt sugar 171MW generation across 7 mills 105MW export capacity 420 kt molasses Sold to Ethanol, domestic and export markets Produce 60Ml ethanol 290Ml fertiliser Sucrogen participation Third Party supply 3

4 Sucrogen is Australia’s leading sugar producer and 7 th largest in world Sucrogen is a world scale raw sugar producer, and the second largest exporter of raw sugar in the world In Australia, Sucrogen is the largest raw sugar producer Sucrogen exports of ~2Mt are greater than 50% of Australia’s sugar exports Raw Sugar Production by Miller, M tonne, 2008 Season Source: ASMC, CSR Analysis Major Global Producers (Raw Sugar Equivalent, M tonnes) Source: Company filings # of Mills

5 … large even Vs Brazil Sucrogen is a large-scale miller, even when compared to the Brazilian sugarcane industry Despite higher in-field cane costs, Sucrogen is competitive with Brazil due to lower cane and sugar logistics costs and comparable milling costs Relative Cost of Sucrogen is Competitive With Brazil (Centre South) Source: CSR Analysis Sucrogen’s milling business is as large as the 5 th largest Brazilian Miller Sucrogen

6 Sucrogen is a significant producer of renewable energy—ethanol The largest Australian producer of sugar-based ethanol A significant and growing fertiliser market share in major Queensland farming areas with innovative “Liquid One Shot” products Significant potential for growth—potential to make up to 100 ML of ethanol using molasses

7 Sucrogen is Australia and New Zealand’s leading Refiner Food & BeverageRetailFoodserviceContainerised ExportsBulk Exports BiBo Refining #1 Three refineries, 70% of Australia and New Zealand’s refining capacity The #1 supplier across all channels

8 The Australian Sugar Industry needed to adapt Australia still important in world trade but Brazil displaced Australia in 1996 as key exporter Australian production has dropped but mainly from smaller producers due to: –Sugar price –Urban encroachment –Alternative crops Traded Sugar Supply by Country Australian Cane Crushed by Company Source: USDA Source: BSES, CSR Analysis

9 Milling consolidation has occurred in recent years as cane supply reduced Australia’s best regions are low cost by world standard, and –Gap to Brazil has narrowed in recent years (due to exchange rate) –Although still higher than Brazil Cane Crushed by Region Cost of Production – Full Economic, FOB basis, 07/08 Source: LMC Source: BSES, CSR Analysis How we adapted

Industry Restructuring Industry restructuring has allowed the industry to respond dynamically to a changing environment –Deregulation –Farm consolidation –Mill consolidation –Grower pricing –QSL privatisation & commercialisation –STL industry ownership 10

11 Cogen capacity has increased in response to government policy settings (MRET) Sucrogen has added 100MW over last 15 years. Has potential to add a further 300MW bagasse-based capacity Sugar Industry Renewable Electricity Capacity Potential of Sucrogen cogen supply Source: ORER, CSR Analysis Cogen investments aid capital returns

12 Australian Ethanol Market is developing Australian Ethanol Supply Growth Potential of Sugar Industry Supply Ethanol supply has doubled over the last decade as the fuel ethanol market has developed Sugar industry has potential to supply large amounts of ethanol. Requires: –Further market development –Supportive government policy –Attractive price relativities Source: Biofuels Association of Australia, CSR Analysis Source: CSR Analysis

Ethanol Excise Sugar-derived ethanol offers significant CO 2 abatement opportunity Current government policy does not differentiate between carbon intensity of fuels (even under CPRS) Maintain existing policy of energy neutrality of excise, and then adjust excise based on carbon intensity of fuel Sugar-derived ethanol would attract excise of 6cpl*, compared to 38cpl for petrol. Sources: Energetics 2007 (Peer reviewed by CSIRO) *Unadjusted ethanol excise would be 25cpl based only on energy neutrality 13

14 Positive market dynamics for sugar and renewable energy Fundamentals are supportive for global raw sugar price Longer term global sugar demand remains strong Carbon constrained economy expected to drive increased demand for renewable fuel and energy (Source: Department of Climate Change) World ICE#11 Raw Sugar Price Expanded Renewable Energy Target

15 Sugar yields are significantly less variable than grain yields Yield Index ( = 100) Year on Year % Change in Yield Source: ABARE Australian Commodities Dec’09, CSR Analysis. Sugar yield is tonnes of sugar per hectare harvested *Coarse grains are barley, oats, sorghum and maize Severe drought in 1990 and 1991 seasons Orange rust disease in 2000 season

16 Sugar yields are significantly less variable than grain yields Yield Index ( = 100) Year on Year % Change in Yield Source: ABARE Australian Commodities Dec’09, CSR Analysis. Sugar yield is tonnes of sugar per hectare harvested *Coarse grains are barley, oats, sorghum and maize Severe drought in 1990 and 1991 seasons Orange rust disease in 2000 season

17 Conclusion – A profitable industry with growth options Attractive industry outlook –Positive trend for long term sugar price based on increasing world sugar and ethanol demand –Industry has reshaped itself to be responsive to market drivers –Opportunities for growth in renewable energy – ethanol and electricity Sucrogen, as the leading Australian player, is well positioned to further capitalise on these opportunities Increased earnings base from refining and renewables